The tail end of last year was dominated by stories of the potential cost of TalkTalk’s cyber attack in October and now the company has revealed details of the financial impact from the hack.
It’s a fairly hefty hit. TalkTalk said the attack knocked £15m off trading revenue, forced it to book exceptional costs of £40-£45m (higher than the initially anticipated £30-35m) and resulted in the loss of 101,000 customers. And the company admits it has taken a while to lick its wounds too – a statement said ‘it took longer than expected to return the business to normal operational effectiveness’.
The attack turned out to be less successful than first thought – around 4% of the firm’s four million customers were affected and there was no financial loss despite the partial disclosure of customers’ payments details. But unsurprisingly, the mobile phone and broadband company’s reputation took a big hit – not helped by its initially slow response to the attack – and customer confidence was shaken enough to look elsewhere.
TalkTalk did have the odd reason to be cheerful amid the gloom. Despite the knock it took from the cyber attack, the firm is apparently on track to deliver full year results ‘in line with market consensus’. It expects earnings before interest, taxes, depreciation and amortisation to be in the region of £255m-£266m. Shares were up 6% at the time of writing to 231p, so the bounce back is evidently on the cards for shareholders.
Revenue inched up 1.8% for the three months to the end of December (though that’s still a significant slowdown from 4.2% growth for the same period last year and not great when compared to 5.9% growth in the previous quarter). It also looks like TalkTalk standing firm by refusing to let people terminate contracts without incurring charges took the edge off potentially flighty customers. It tried to offer a sweetener in the form of a free upgrade, which proved enough of a draw for nearly half a million customers.
Chief executive Dido Harding, said, ‘It is encouraging to see the business returning to normal after a challenging quarter that was dominated by the cyber attack.’ She suggested trust in the TalkTalk brand had improved ‘since just after the attack’, though you’d think the company would really be bungling the handling of the aftermath if it had continued to plummet.
Some difficult figures to smooth over there, but it’s likely Harding will be breathing a sigh of relief that update has now come and gone. There is still work to be done – particularly on improving customer trust, but the TalkTalk board will be hoping that’s the biggest damage out the way.